A. Accounting Convention
The accounts are prepared on accrual basis under the historical cost
convention in accordance with the provisions of the Companies Act, 1956
and mandatory accounting standards issued by the Companies Accounting
Standards Rules, 2006 except otherwise stated.
B. Fixed Assets
Fixed assets are stated at cost less accumulated depreciation. The cost
represents the cost of acquisition inclusive of duties, taxes,
incidental expenses, erection / commissioning expenses and interest
etc. upto the date the assets is put to use.
The assets are assessed for possible impairment at Balance Sheet dates
based on external and internal sources of information. Impairment of
losses if any are recognised as an expense in the Profit & Loss
Software expected to provide future enduring economic benefits is
stated at cost less amortization.
All up gradation / enhancements are charged off as revenue expenditure
unless they bring significant additional benefits.
i) Depreciation is provided at the rates specified in the schedule XIV
to the Companies Act, 1956, in respect of the fixed assets at the
factory in Uluberia on Straight Line Method and on remaining assets on
Written Down Value Method. However, depreciation on Factory Shed &
Tubewell located at the factory at Liluah has been provided @ 13.91%
(WDV) & Depreciation on Factory Shed located at Uluberia has been
provided @ 4.75% (SLM) which is not lower than the depreciation
stipulated in Schedule XIV of the Companies Act, 1956.
ii) Depreciation on fixed assets added / disposed off during the year
is provided on prorata basis.
iii) Assets costing less than or equal to Rs.5,000/- are fully charged
to revenue in the year of purchase.
iv) Intangible Assets
Computer Software is normally amortised over its useful life of 3 years
as estimated by the management.
Computer Software acquired but not found suitable is fully amortised in
the year of acquisition.
Licenses representing right to use are amortised over a period of 3
Long term investments are carried at cost less provisions for permanent
diminution in value of such investments.
i) Raw material, Consumable stores, Spares, Power & Fuels and Packing
Materials are valued at cost on FIFO basis. Inventories of Rejected/
Scrapped finished goods are treated as raw materials and valued at
current Market Price.
ii) Finished goods are valued at cost or net realisable value whichever
is lower. Cost is determined on average cost basis including
proportionate fixed manufacturing overheads based on actual capacity.
F. Foreign Currency Transaction (other than for Fixed Assets)
Export Sales in Foreign Currency are accounted at the Exchange rates
prevailing on the date of negotiation of export documents by bank or at
the exchange rates under the related forward exchange contracts.
Receivables & Payables not covered by forward exchange contracts are
translated at year end exchange rates and the Profit / Loss so
determined and also the realised exchange gains/ losses are recognised
in Profit / Loss Account.
Excise Duty and Service Tax credit on purchase of Raw Materials,
Consumables and Capital Goods and on services received are deducted
from the cost of such materials, capital goods and services.
H. Value Added Tax
Input tax credit on purchase of Raw Materials, Consumables and Capital
Goods are deducted from the cost of such materials and capital goods.
I. Export Benefit
Export benefits under Duty Entitlement Pass Book scheme,based on
shipment date, are accounted when there is no reasonable doubt of
J. Gratuity & Encashment of Leave
The Gratuity and Encashment of Leave are provided on Actuarial Valuation
as required under AS-15 (revised).
Bonus is provided for on the basis of liability incurred.
L. Taxes on Income
In case of the Company, provision for tax is made for current and
deferred taxes. Current Tax is provided on the taxable income using the
applicable tax rates and tax laws. Deferred tax assets and liabilities
arising on account of timing differences, which are capable of reversal
in subsequent period are recognized using tax rates and tax laws, which
have been enacted or substantially enacted . Deferred tax assets are
recognized only to the extent that there is a reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets will be realized. In case of carry forward of
unabsorbed depreciation and tax losses ,deferred tax assets are
recognized only if there is virtual certainty that such deferred tax
assets can be realized against future taxable profits.
M. Interest and Finance Charges
Interest and Finance Charges charged to Profit & Loss Account include
interest and bank charges on bank borrowings, short term and long term
and discounting of inland, foreign L/Cs including those in favour of
bankers. Interest on negotiation of Purchases/Sale documents are
charged to revenue account on the basis of recognition of
Purchases/Sale. Interest attributable to qualifying assets only in
specific borrowing cases are capitalised as cost of assets.
Purchases are inclusive of carriage charged by the suppliers in their
O. Segment Reporting Policies
The Company is engaged in the manufacture of Castings & M.S. products
which are subject to the same risk & returns and hence there is one
primary segment. The analysis of geographical segments is based on the
areas in which the Company operates.
Government grants and subsidies are accounted when there is no
reasonable doubt of collection.